Chapter 6

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Three conditions generally are present when fraud occurs. Select the one below that is not one of those conditions.

Supervisory position.

Which of the following is most likely to be an overall response to fraud risks identified in an audit?

Use less predictable audit procedures.

Which of the following should the auditors obtain from the predecessor auditors before accepting an audit engagement

Facts that might bear on the integrity of management

Which of the following elements underlies the application of generally accepted auditing standards particularly the standards of fieldwork an reporting

Materiality and auditing risk

Which of the following should not normally be included in the engagement letter for an audit?

A listening of the clients branch offices selected for testing

In planning and performing an audit, auditors are concerned about risk factors for two distinct types of fraud: fraudulent financial reporting and misappropriation of assets. Which of the following is a risk factor for misappropriation of assets?

An unreliable accounting system

The risk that the auditors will conclude based on Substantive procedures that a material misstatement does not exist in an account balance when in fact such misstatement does exist is referred to as

Detection risk

The audit committee of a company must be made up of :

members of the board of directors who are not officers or employees

As one step in testing sales transactions a CPA traces a random sample of sales journal entires to debits in the accounts receivable subsidiary ledger. This test provides evidence as to whether?

Recorded sales have been properly posted to customer accounts.

Which portion of an audit is least likely to be completed before the balance sheet date?

Substantive procedures

The primary objective of tests of details of transactions performed as substantive procedures is to :

Detect material misstatements in the financial statements

Which of the following best describes what is meant by the term "fraud risk factor"

factors often observed in circumstances where frauds have occurred


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